 Internal Revenue Service IRS tax news. Letters about third round of economic impact payments issued, important steps to take for missing payments and corrections. But first, an attempt at a joke, I apologize in advance. The press's most recent deceiving catchphrase about the president seems to be that he's super cool. However, suspicions happened had that this is simply clever, deceptive wording for the fact that the president is actually quite cold, both in terms of policy based on principle rather than power politics, and literally, is the president cold? Oh no, no, no, not according to the press, not cold, but super cool. Words matter, don't you see, and it's our job to use words to deceive. IR2022-72, March 30th, 2022, Washington with the completion of special mailing of all letters 6475 to recipients of the third round of economic impact payments. The Internal Revenue Service reminds people to accurately claim any remaining third round stimulus payment on their 2021 income tax return as the 2021 recovery rebate credit. I love how they call it up here. It's a special mailings of the letters. I think it just went through the normal mail. I would guess, but in any case, it's a special mailings. So you might have gotten the letter 6475, quick recap on what the stimulus payments are, how we deal with them with regards to the taxes. We had three stimulus payments that went out. The first two are tied to the 2020 tax return, not the current one we're focused on here. The third one is the one that's tied to the 2021 tax return. And you can think about the economic impact payments, the stimulus payments, whatever you want to call them, the checks that were sent out to basically everybody by the government as free payments of a credit that they made up and put on the tax return. It's similar to what they're doing with the child tax credit now. So I think that one's easier for people to comprehend because we've seen the child tax credit before and then they gave out the advanced payments and they called the advanced payments, advanced child tax credits, which is indicating in the name what they are. Whereas the stimulus checks don't have that. We didn't have the credit on the books before, which is called the recovery rebate credits. We made it up last year in 2020, continue it on to 2021. And then they called the pre payment, the stimulus checks or the economic impact payments, and they called the credit, the recovery rebate credit, which don't sound similar at all. So it doesn't even seem like they tie together. And if you got the proper amount of the stimulus checks, then you won't be recording any recovery rebate credit typically because you already got the pre payment and you got the full amount of the pre payment, which means most people probably won't even be dealing with the recovery rebate credit. It's only there as a catchall, a fix, a tool to use if there's something that went wrong with the economic impact payments. So that means you should have got your economic impact payments. If you didn't get your economic impact payments, then the tool to fix that, to recover that is to use the recovery rebate credit filed on the 2021 tax return for the third economic impact payment, not the first two. Those then the fix would be to file the tax return for 2020. We're looking at the third one, and that would be the fix for the recovery rebate credits on the 2021 tax return filed in 2022. So that's the general rule. Now note that the IRS is having problems with this. They knew they were going to have problems with this because of the confusion. We just basically talked about and they saw the backed up returns that happened from the prior year from people not properly filing and recording the recovery rebate credit. So that's problem is continuing this year. They're going to get backed up because this is a new thing and you got the three payments which are confusing. And then they did the same thing with the child tax credit, which is kind of confusing because no one's ever seen that before either. So you want to make sure that you're recording this properly or it's going to delay most likely the refund because it's going to require manual processing. And they're backed up on returns with the manual. If it takes a person to look at it because of the COVID stuff and everything and that, you know, they restricted social distancing and working from home and all that kind of stuff. So you want to get the tax return right tax software is helpful to do it. Remember that you're looking at the third round economic impact payments. You shouldn't have to really do anything with the recovery rebate credit unless something went wrong with the stimulus checks. Okay. So through December 31st, 2021, the IRS issued more than 175 million third round payments totaling over $400 billion to individuals and families across the country. Now we're paying it back in inflation, but it was nice for a while. I guess it was a good, it was a good like thought, but I think the inflation is going to overpace it pretty, you know, if it has any case, most of the third round payments were issued in the spring and early summer of 2021. The IRS continued to send a plus up payments through December if after their 2020 tax return was processed last year, the taxpayer was eligible for additional amounts as required by law. The IRS is no longer issuing first, second or third round economic impact payments. Instead, people who are missing a stimulus payment or get less than the full amount may be eligible to claim a recovery rebate credit on their 2020 or 2021 federal tax return. So you want to get the benefit of these stimulus payments. I would, you know, try to try to get ahold of that because again, that's, that's the payment that's kind of, you know, that's the thing we're getting to pay for the inflation that's going to, that's coming and is here at this point in time. So most eligible people already receive the full amount of their credit in advance and don't need to include any information about this payment when they file their 2021 tax return. This includes the additional payments called quote plus up and quote payments. The IRS issued to individuals who initially received a third round economic impact payment based on information on the 2019 tax return and were later eligible for larger amounts based on information on their 2020 return. So we can imagine things that go wrong when they try to send out an advanced payment because even though the advanced payment is based on fairly basic information, there are still a couple of things that can cause problems, including a phase out of the credit and that would be dependent on an estimate for the tax return. So that phase out could basically be wrong and also dependence, for example, could, could throw off the calculation of the credit. Those are just a couple of things. So they tried to shore up that stuff with some, some tools so that you could give the IRS the information they needed, such as if they based it on 2019 to 2020 return. And then they tried to adjust the payments to fix that and hopefully they got it right. So you don't have to file for the recovery rebate credit. But if they didn't, then the final fix is taking the recovery rebate credit. So individuals may securely access their IRS online account. There's a link to that here to view the total amount of the third round economic impact payments issued to them. So if you don't get the letter, the letter was their big fix to solve the problem of the errors that are going to be caused for the tax returns because people are confused about this. I don't think it's going to solve all the problems. And if you don't get the letter, then you could probably go to the IRS website and look on your account. You could log into your account there, which I think is easier now. They were trying to do facial recognition stuff, which was a mess and kind of, kind of weird that they need that information. But they've taken that away. So I think it's, you can get in there and you can check out your, your payments and so forth to help you to fill out your taxes. So this information became available on January 15th, 2022 under the records page in online account. For married individuals filing a joint return, each spouse will need to log into their own online account or review their own letter 6475 for their portion of their joint total payment. So you're going to have to look at your own account because they sent them out per social security number, not per married filing joint return. CFAQs for topic G, finding the third economic impact payment amount to calculate the 2021 recovery rebate credit for more information. There's a link to that here. Third round economic impact payment, not received, double check records first. So if you didn't get the third round, you're saying, I'm going to file for that recovery rebate credit. Well, you want to check your records and look on the IRS website because if they think they sent out the payment, then it's going to cause a problem because what you're going to give to them is not going to match what they have on records. They might be wrong and you might have to do that, but it's going to cause a delay. You're probably not going to get the refund that fast because they're going to say, hey, this doesn't line up to what we think happened. And so we got to figure this whole thing out at that point. So individuals are encouraged to double check their bank accounts, especially in early spring and summer of 2021. So it's possible they just gave you the money and you're like, whatever, I'm just spending stuff right now. I'm on vacation because it's summertime and you didn't even notice it there because it was an electronic transfer because they're trying to do all these electronic transfers. So you might have gotten it. You might want to double check on it, check the records on the IRS side, check the bank account to see if it went through and you might say, ah, yeah, I spent that, you know, at the, you know, whatever I was doing. So to see whether they received a third round economic in advance last year. So if an individual did not receive the third round payment and their IRS online account shows a payment amount greater than zero or they received notice 1444C or letter 6475 indicating that a payment was issued to them. They should contact the IRS as soon as possible to see if a payment trace is needed. So if you're saying, OK, they're telling me that they gave me a payment, but I don't see the payment on my side. Then one of two things happened, right? Well, or you can check out a couple possibilities. The IRS most likely sent out a payment. Maybe it didn't go to the right account or something like that or it got lost in the mail, in which case it would not have cleared on the IRS side. And they should realize that. So you should be able to say, hey, you sent out this payment. They should be able to look at it and say, yeah, we sent it out, but it never got to the destination. No one cashed it. The credit card thing never got cashed or whatever. In that case, you would think you can remedy it at that point. Or it went to the wrong person, possibly someone committed fraud or something like that. And basically took the economic impact payment and it got cashed, which is a little bit more complex situation. But you should at least be able to see that which account it got cashed into. And then you could they could go from there and try to figure it out. And hopefully then you can recover any payment from that point. So you would think those would be the two things that would happen if they said they sent out a payment, but you didn't get the payment. But you have to follow up with the IRS to do that. And that's going to be a bit more of a pain, a bit more of a problem. So good luck with that. So and so, but hopefully you can get that done. So note that online accounts show that most current EIP information. So if payment was issued and returned to the IRS, the amount shown in the online account may be less than what is shown in the letter. So, you know, if it bounced back, if they sent out the check and it bounced back, then they should be aware of that at some point. But it might take time for that to be the case. So taxpayers should not request a payment trace to determine if they were eligible for a payment or to confirm the payment, the amount of payment they should have received. Individuals do not need to wait until their trace is complete to file their 2021 tax return. When completing the Recovery Rebate Credit Worksheet or answering EIP questions, economic impact payments that is in the tax file to where taxpayers have two options. Use the amount on the letter 6475 or EIP3 amount from online account to calculate the RRC Recovery Rebate Credit amount online 30. Contact the IRS to trace the EIP amount. Once the EIP trace is complete, the IRS and the taxpayer will receive notification of the results of the EIP trace, the account it was sent to and the amount or a copy of the cash check. If the trace indicates the taxpayers receive the EIP amount, no further action is necessary. If the EIP was not received by the taxpayer, the IRS will adjust the RRC Recovery Rebate Credit amount on the tax return. So they're basically saying one option you could do is file your tax return using the amount shown that they think that they paid you, that you could find on the letter 6475 or on your account so that your return can be processed without having a problem in the processing, even though you think that that amount is wrong, but you've started a trace so they're going to trace the payment that they sent out to see if it was cashed and if so, where it was cashed. And because the IRS has the trace initiated, they will then go through with the trace and if the trace comes out to, they actually did give you the cash and you say, oh yeah, you're right, you did give me the cash, I saw it cashed, then no change. If, on the other hand, it went to the wrong person or something like that or bounced back to them, then they can make the change to the Recovery Rebate Credit basically on their end. I think that that's my recap of what I'm getting from this at least. I've not done this yet. I've not done this before, so that's my recap. Hopefully that goes smoothly. Again, if that's a process you're going through, good luck, God bless, and hopefully it works out well, but I have some skepticism. But let's see, use the amount of EIP the taxpayer believes they received to calculate the IRR amount on line 30. So now you can do the option to use the amount of EIP the taxpayer believes they received. So this is the one that you think is correct, even though it's not reflective of the paperwork that you got. That would be option number two. If the taxpayer calculation does not match the IRS calculation, the processing of the tax return will be delayed. The RRC amount will be adjusted to match IRS records and the taxpayer will receive another notice that includes a telephone number to contact if they disagree with the change to the tax return. If the taxpayer contacts the IRS and disagrees with the changes made, IRS will contact a trace of the EIP if necessary. Once the EIP trace is completed, the IRS and the taxpayer will receive notification of the results of the EIP trace, the account it was sent to, and the amount or copy of the cash check. If the trace indicates the taxpayer received the EIP amount, no further action is necessary. If the EIP amount was not received by the taxpayer, the IRS will adjust the RRC recovery rebate credit amount on the return. All right, correcting mistake. After the 2021 tax return is filed, no amended return needed. So what if there's an issue? Do I have to file an amended return? Individuals who made a mistake calculating the recovery rebate credit and claim an amount on line 30 for 2021 recovery rebate credit should not file an amended return. So you might say, oh man, I didn't know. I tried to file something for the recovery rebate credit and I shouldn't have because it doesn't, because I actually did get the payment. What do I do at that point? Do I amend the tax return and try to fix it? Well, you shouldn't really need to do that because the IRS will kind of pick it up on their side. So what they're gonna do, whatever you put on the recovery rebate credit, they're gonna match it up to what their records say. And if they don't tie out, you're probably gonna get a notice saying that there's a problem. Now the issue there is it's gonna delay the return. It might take some time for them to process that, but once that error, if there was an error on the return is already there, then amending the returns is probably only gonna confuse the IRS further. It might be best then to let the IRS process the return. They should catch it on their end automatically, although it will probably delay the return and then make the adjustment, which you can then approve or disapprove at that point in time would be what I would think the process would look like at that point, but it will most likely delay the return. The IRS will correct the amount of the 2020 when recovery rebate credit and send a notice identifying the changes made. If a correction is needed, there may be a delay in processing the return. If the taxpayer agrees with the changes made by the IRS, no response or action is required to indicate they agree with the changes. If the taxpayer disagrees, they can call the toll free number listed on the top right corner of their notice. Amended return may be needed for those eligible to claim the credit and IRS records show no economic impact payment was issued for eligible individuals who didn't claim a recovery rebate credit on their 2021 tax return, line 30 is blank or zero and IRS records do not show the issuance of an economic impact payment. They will need to file a form 1040X. So here's like the exception to the rule, which shouldn't be there for most people. So like if you filed the tax return, you've recorded a recovery rebate credit as if you needed to get more money, a credit from it, then the IRS will most likely fix that error as you put the wrong amount in the recovery rebate credits and you probably wouldn't want to file an amended return. But if you have the situation where you didn't file for the recovery rebate credit, you didn't put anything there, then the return might just process through without them checking that number because there's nothing in it. So in that instance, if you didn't file for a recovery rebate credit and you should have got one, then you might have, that's the instance where you might have to file the form 1040X the amended return. There's a link to that here to claim the remaining amount of stimulus money for which they are eligible. This includes individuals who may not have received the full amount of the third round economic impact payments because their circumstances in 2021 were different than they were in 2020. Individuals can use the interactive tax assistance should I file an amended return to help determine if they should amend their original return. Taxpayers who need to file an amended return to claim the 2021 recovery rebate credit, even if they don't usually file taxes, should use the worksheet in the form 1040X to determine the amount of the credit. Enter the amount on the refundable credits section of form 1040X and include, quote, recovery rebate credit, end quote, in the explanation of the changes section. Individuals who filed their 2021 return electronically and need to file an amended return may be able to file form 1040X electronically. If a taxpayer did not file their 2021 return electronically, they'll need to submit a paper version of form 1040X and should follow the instructions for preparing and mailing the paper form. More information can be found at the links below, recovery rebate credit link, and 2021 recovery rebate credit frequently asked questions. There's links to those items here. There'll be a link to this in the description.